TPAs threaten to withdraw service | india | Hindustan Times
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TPAs threaten to withdraw service

Settling insurance claims in the coming months could get more cumbersome. Third party administrators-the intermediaries that facilitate transactions between hospitals, insurance firms and patients-are threatening to withdraw services if their fees are not doubled in the next few weeks.

india Updated: Aug 26, 2010 23:34 IST
Mahua Venkatesh

Settling insurance claims in the coming months could get more cumbersome. Third party administrators (TPAs)-the intermediaries that facilitate transactions between hospitals, insurance firms and patients-are threatening to withdraw services if their fees are not doubled in the next few weeks.

At present, a TPA charges 5.25 per cent of the premium paid by policyholders as service fee. They now want this nearly doubled to 10 per cent, failing which they will suspend services across hospitals.

This could potentially affect the claims of an estimated 30 million people who are insured.

This is the amount insurance companies are charged for processing health claims, storage of data, issuing pre-authorisation for cashless hospitalisation and checking fraudulent claims.

"We are looking at withdrawing our services completely though that would be the last recourse," S K Mahapatra, secretary general, Association of Third Party Administrators (ATPA) told Hindustan Times.

TPAs, typically stationed in hospitals, are usually the only point of contact between the patient and the insurance firms. TPAs carry out all administrative tasks on behalf of insurance companies and settle claims for patients who present a valid health insurance card.

Suspension of services by TPAs, therefore, could seriously affect patients who may be forced to first pay in cash and later claim reimbursement directly from insurance firms.

The TPAs are also looking at taking legal recourse or going to the Competition Commission of India to register their discontent over a tender floated by the four state-owned general insurance firms to form a joint venture for setting up a TPA of their own.

"This is going to boost monopoly and it is against basic market practices," Mahapatra said.

The Insurance Regulatory Development Authority (IRDA) said insurance firms are free to set up their own TPAs.

"There is no rule that prohibits the general insurance companies to form a joint venture for setting up of a TPA, it is their call," J Hari Narayan, IRDA chairman, told HT.

TPAs were introduced by the IRDA in 2001-02 to act as intermediaries under a contract from insurance companies.